It looks like the end of the road for South Korean cryptocurrency exchange Coinbin, which had previously taken over the previously-hacked platform Youbit. Coinbin has filed for bankruptcy, with losses totalling more than $26 million, according to reports from Business Korea. The platform’s CEO, Park Chan-kyu made a public announcement about the exchange’s closure, with all cryptocurrency trading and cash settlements ceased. The remainder will be undertaken as part of the platform’s bankruptcy procedures.
This comes shortly after the sentencing of South Korean exchange Komid, who were found guilty of faking transaction volumes to make their platform appear more popular and increase their profit.
Accusations of Embezzlement
Alleged embezzlement in addition to previous troubles of Youbit have lead to Coinbin’s current situation
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The insinuation from Mr Chan-kyu is that Coinbin was forced to shut down due to internal embezzlement by a Coinbin employee. He claims that a Coinbin staff member that was in charge of the exchange’s cryptocurrency balances had caused “a rise in debt” due to their “embezzlement”. According to Chan-kyu, the employee in question is said to have appropriated the keys to hundreds of cryptocurrency wallets held by the Coinbin exchange, containing several hundred Bitcoins. They are also claimed to have lost the cryptographic key for an Ethereum wallet holding 100 Ethereum coins on purpose.
What’s even more fascinating about this turn of events is that the executive employee accused of embezzlement is said to be the former CEO of the crypto exchange that Coinbin rescued, Youbit. In December 2017, Youbit suffered a critical cyberattack, resulting in the loss of almost a fifth (17%) of its total assets and eventual bankruptcy. However, Coinbin took over the mantel at Youbit last year, bringing the platform under the Coinbin umbrella.
There is an argument in some crypto quarters, given that the executive employee in question had worked for both Coinbin and Youbit, that suggests Youbit may not have been “hacked” after all. According to South Korean news portal The Investor, an anonymous user claimed at the time of Youbit’s decision to file for bankruptcy that it was a case of “executives trying to avoid their responsibilities and make profits from the sale of the company”.
It may also be no coincidence that the announcement of Youbit’s cyberattack was released at the same time the South Korean Justic Minister, Park Sang-ki, intimated that the government was considering prohibiting all domestic cryptocurrency exchanges. Although the ban never transpired, the South Korean government’s increasing uncertainty over crypto exchanges and Youbit’s so-called demise contributed to 2018’s bearish crypto markets.
Impact on the Market
Of course, news of more insecure, untrustworthy cryptocurrency exchanges is more power to those that are well-regulated and offer a secure transactional experience for crypto investors. The likes of Coinbase, Binance and the eToro platform are considered some of the largest and most secure platforms for individuals to trade virtual currencies in real-time. According to our Coinbase review, all deposits at Coinbase are insured for outstanding customer protection and they were also the first cryptocurrency exchange to offer a direct customer support telephone hotline.
Nevertheless, with the price of Bitcoin starting to show signs of an upturn in fortunes after a pretty dismal winter, the last thing the cryptocurrency sector needs is more controversy surrounding the platforms that supposedly make it easy and safe to buy and sell crypto coins.
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